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Hackney Pension Fund: time to sell fossil shares

On 19 September, Divest Hackney will lobby the six members of the Hackney Council Pension Fund to sell off its £42 million shareholding in fossil fuel companies. There’s a strong case for action – both financial and environmental. Deutsche Bank reports that companies respecting environmental and social issues ‘constantly outperform the market.’ While fossil fuel shares represent a fraction of the pension fund’s £1.1 billion assets, there’s evidence of corrupt, unsustainable or unethical business activities in this portfolio that really doesn’t sit easily with the council’s sustainable communities’ strategy.

Divest Hackney anticipates a lively lobby of the council on 19 September, from about 6pm. But it has produced hard-edged financial and environmental evidence to back up its case. It is calling on the council to:

Divest from direct ownership and any joint funds that include fossil fuel public equities and corporate bonds within 5 years’ maximum.

Freeze any new investments in fossil fuels made by Hackney Council Pension Fund or Hackney Council itself.

Here’s why: climate change is the greatest challenge humanity has encountered and is driven by greenhouse gas emissions, especially carbon dioxide CO2. Global warming in excess of 2°C will have catastrophic consequences. To have a chance of staying below this maximum upper limit of warming, over 80% of known fossil fuel reserves must stay in the ground.

The fossil fuel industry, including firms the council has shares in, holds vast oil and gas reserves which if burnt would result in carbon emissions 5 times larger than what it is deemed to be safe.

Hackney’s £42m invested in fossil fuel companies such as ExxonMobil and Shell is at odds with its commitment to tackle climate change and to reduce the borough’s carbon emissions by 80% by 2050.

Here’s a snapshot of business practices and carbon emissions in four of the 22 fossil fuel shareholdings:

Petrobas: £901,000 invested. The Financial Times reports that Petróleo Brasileiro, one of Latin America’s largest companies, is at the heart of a “scandal that is engulfing Brazil …corrupt Petrobas directors collaborated with Petrobras’ contractors, including some of Brazil’s largest construction companies, to line their own pockets. Some of the directors accumulated funds of more than $100m in Swiss bank accounts.”

Glencore Xstrata: £775,000 invested: registered in tax haven Jersey, an investigation by the London Mining Network into the Anglo–Swiss commodity trading and mining company found that:

In April 2012, Glencore appeared in a BBC Panorama investigation, Billionaires Behaving Badly? with charges that its copper refinery at Lulu, Katanga province, Congo was dumping raw acid in a nearby river.

The NGO Global Witness has been investigating how two major international mining companies – Glencore and ENRC – are linked to the controversial secret sales of prize mining assets in the Democratic Republic of Congo.

In the Philippines (see photo) the company is investing $5.9 billion the Tampakan copper and gold project in South Cotabato on the island of Mindanao. The proposed mine has been opposed by local people on Mindanao for two decades, and besides the provincial government’s ban on open-pit mining, the indigenous B’laan community in the area (of whom 30,000 would be displaced by the project) has declared a state of tribal war against the company.

EOG Resources: £5.7 million: a major shale gas driller in the United States.

EOG produced 209 million barrels of oil in 2015 from its oil and shale gas fields, but our research couldn’t find information on carbon emissions in its annual report, which coyly speaks of ‘air emissions’. However, it does report an average of 28 tonnes of CO2 emissions for each barrel of oil produced.

EOG is a member of the American Independent Producers Association (AIPA). The oil industry trade body opposes:

Divestment campaign ‘stunts’: ‘Pensioners, no matter where they live or how they vote, don’t like these divestment schemes one bit…folks believe they’ve earned this money, that they’re entitled to receive it, and that they don’t want their financial well-being later in life to be impacted by activist-led political stunts. And who could blame them?’

Federal Regulations: such as ‘threatening’ proposals to set minimum standards to ensure shale gas production is accurately measured and reported; and limit the amount of wasted gas that can be burnt off through flaring activities.

Marathon Oil: £3.9 million. In 2015, the US oil and shale gas company reported an 8% increase in global greenhouse gas emissions, and methane emissions increased by 11%. The company:

acquired several interests in the Alberta (Canada) oil sands projects in 2007 (image from flickr).

says its North Dakota Bakken Shale oil play ‘is a centerpiece of our unconventional resource portfolio. As of year-end 2014, we held 290,000 acres in the Bakken oil play in North Dakota and eastern Montana…in Bakken, greenhouse gas emissions increased by 23 percent… While we have connected 98 percent of the production facilities to third-party gas pipelines, flaring of associated gas due to constrained gas pipeline capacity increased GHG emissions. Across the basin, we captured an average 85 percent of produced gas.’ Meaning, presumably, that 15% of its methane gas was wasted and emitted free to air.

BP, Chevron and Shell: £5.9million invested in total: have all sold off their renewable energy, solar and wind power divisions.

The best performing shares are no longer in fossil fuels. Hackney Council exists to serve the people of the borough, and it must therefore acknowledge the significant risks that fossil fuel investments pose to local residents’ financial security and future quality of life. Hackney Council should take a moral, political and economic stand by divesting our money from fossil fuel companies and choosing investments less at risk from climate change legislation and more compatible with our values.